UPDATE 1-Too soon to draw Cyprus stability lessons -US official

Reuters Staff

2 Min Read

By Jonathan Spicer

NEW YORK, March 26 (Reuters) - A U.S. government official said on Tuesday that it was too soon to draw conclusions on financial stability from the bailout of Cyprus, which has rattled markets globally over the past week and a half.

It is still “early days,” Richard Berner, the newly appointed director of the U.S. Treasury’s Office of Financial Research, said, when asked what lessons the United States might learn on the durability of financial markets.

“I think it’s probably early days and too soon to draw those lessons,” Berner said after a speech at New York University’s Stern School of Business. “That’s something that’s going to be worth looking at.”

Large depositors in Cyprus, many of them rich foreigners, face losses after the small island nation struck a deal with international lending bodies designed to bail out and rein in the oversized financial sector.

The deal should keep Cyprus in the European single currency union. With the country’s banks ordered to remain closed until Thursday, and the government there having not yet revealed how it plans to prevent runs on the banks, investors still remained wary of the situation on Tuesday.

In one of his first public appearances as director of the Office of Financial Research, or OFR, Berner said Europe has long been identified as a threat to U.S. financial stability.

“We’ll continue to focus on that,” he said.

The OFR was created by the Dodd-Frank regulatory overhaul to help regulators prevent a repetition of the 2007-2009 financial crisis.

The agency, responsible for collecting and analyzing data to support the Financial Stability Oversight Council, has been under scrutiny for its slow progress. Many Republicans in the Senate want to see it scrapped.

Berner, a former chief economist for Morgan Stanley, began his six-year term in January.